Different Types of Systematic Investment Plans and Their Benefits

A Systematic Investment Plan (SIP) is among the go-to investment plans for investors seeking gradual yet lucrative returns through mutual fund instruments. SIP investment has the key advantage of helping you, especially if you are a small and risk-averse investor, to grow your wealth into a corpus by investing small sums of money. What some investors may not know is that this kind of versatile investment includes different kinds of plans that can match investment goals, aiding you in fulfilling your financial objectives faster. This article sheds light on different SIPs, their working, and resulting unique perks for investors.

What is a SIP plan?

A SIP investment is a way to invest in a mutual fund scheme, rather than an actual investment instrument. The great part of a SIP is that you can invest small amounts of capital at regular and frequent intervals, in a variety of mutual funds. For those who wish to invest small amounts at intervals, rather than a lump sum upfront, a SIP may be an option.

Some of the best SIP plans efficiently minimise your risk in investment as they let you purchase mutual fund units in regular instalments so that you spend less in your investment, in general. Hence, SIPs are very popular as they prove to be among the most affordable methods to invest in mutual funds. For instance, investors who invest a set amount at fixed intervals automatically tend to make the most of market volatility and remove the bother about timing the market. Consequently, a SIP works in a way that allows potential gains even when there are movements in the market.

What are the different types of SIPs and when to choose them?

A SIP is a proficient method of investing in a mutual fund, rather than a financial instrument. A SIP brings discipline in investment as you must save and invest a fixed amount at intervals decided in advance for a particular tenure. Besides these clear benefits of a SIP investment, you also get to choose from a range of SIPs that have distinct features matching unique financial requirements. These different types are expressed below:

Regular SIP: Among SIP investment plans, the regular SIP stands to be at the top in the popularity charts. This lets you make set investments on a monthly basis, and for a predetermined tenure. You can consider this kind of SIP when you wish to take advantage of rupee cost averaging and ride the volatility of the market. These SIPs are also selected as they bring a certain disciplinary approach to investment, forcing you to invest a fixed amount at a particular time.
SIPs Based on Tenure: An investor may choose a SIP when they have a specific time horizon for investment in mind aligned with their risk appetite and financial aims. Therefore, SIPs that are maintained for a particular period like 3, 5, or 10 years, fall within this kind of SIP category. In this case, the tenure of the SIP remains fixed and cannot be changed once the scheme is begun.
Combination SIPs: SIP investment can invest your money in different kinds of financial instruments like debt and equity. In a combination SIP, you have the option to invest in a mutual fund with a blend of debt and equity instruments. The ratio of investment in these instruments is pre-planned and you can go in for such an investment when you wish to have a balanced investment scheme and diversify your portfolio to manage your risk.
Multi SIPs: As the name suggests, this kind of SIP constitutes plans that invest your money in multiple mutual fund schemes with different risk characteristics. The ratio of investment is predetermined, and you can invest in these types of SIPs when you wish to explore different risk-oriented funds based on your financial goals.
Trigger SIPs: Among the types of SIP schemes, you can choose those that are designed to specifically kick in when certain market conditions get triggered. Therefore, the SIP investment is only made when a certain market condition occurs, like say, when the market drops by a pre-specified percentage. Through such SIPs, investors gain a disciplined method of investing, yet aid investors in making the most of opportunities in the market.
Step-up SIPs: Step-up SIPs permit investors to increase the amounts invested in a SIP at regular periods. Investors may choose to opt for this kind of SIP when they know they will be able to increase their SIP amounts, say every quarter, or on a six-monthly basis. Therefore, such a SIP is chosen to benefit investors as their savings or income increase.
Flexible SIPs: In a flexible SIP investment, an investor is permitted to modify their SIP investment according to changes in market conditions. This means that investors can invest small amounts when markets appear on a downward trend, and increase investment amounts when the markets see an uptick. When investors want to mitigate their risk, they may choose this kind of a SIP.

Which is the best type of SIP?

Among types of mutual fund SIPs, there is no real ‘best type’. The best type for one investor may not be the most prospective for another. Investment in any financial instrument or method of investing depends entirely on the individual investor who has unique requirements and financial goals. Therefore, different types of SIPs cater to distinct needs, not to mention differences in investors’ risk profiles. For instance, a beginner or small investor may not be comfortable with a multiple SIP plan and may prefer a flexible SIP or a combination SIP, as these two allow investors to allocate smaller amounts to plans (and permit gradual increases if needed), and permit balanced investment to some degree.

Conclusion

SIP investment is one of the preferred methods for investing in mutual fund schemes today. With an array of types of mutual funds and SIPs, anyone from a beginner to a senior citizen can find a SIP suited to their personal financial requirements and individual goals. A SIP is a possible way to invest in the markets and manage your risk, growing your wealth slowly, yet surely. There is no excuse not to invest in a SIP today!

SIPs let you invest small amounts regularly, making it easier to stay consistent with your goals. With time, your money grows faster through compounding, helping you get the most out of your investments. Try our SIP Calculator to see how your money can grow and make smarter plans for your future.

Can Mutual Fund Schemes Invest in Upcoming IPOs?

18 July 2025 | 7 mins read

Can Mutual Fund Schemes Invest in Upcoming IPOs? - H1 Initial Public Offerings (IPOs) have become a buzzword among investors looking for high-growth opportunities. Whether it’s a unicorn startup going public or a reputed company entering the equity market, IPOs attract substantial interest. But what about mutual funds — can they participate in IPOs? And if yes, how does it impact you as an investor in a mutual fund? This article explores the role of mutual funds that invest in IPOs, the process behind such investments, and how you can benefit from this strategy. You’ll also gain insights into how fund managers evaluate IPO opportunities and which mutual funds are more likely to invest in them. Role of Mutual Funds in Equity Markets - H2 Mutual funds play a vital role in India’s equity markets. Managed by professional fund managers, these pooled investment vehicles collect money from multiple investors and allocate it across a portfolio of stocks, bonds, or other assets based on the fund's mandate. In the context of equity investing, mutual funds: Provide diversification to small investors Help in price discovery and market depth Act as long-term institutional investors Reduce risk through strategic asset allocation Given their market presence and influence, mutual funds also participate in IPOs, often subscribing to large portions of new issuances. But this activity is more nuanced than simply bidding for shares. Are Mutual Funds Allowed to Invest in IPOs? - H2 Yes, mutual funds in India are allowed to invest in IPOs — both in the primary market (where shares are first issued) and in the secondary market (where stocks are traded after listing). This means mutual funds can apply for shares during an IPO’s book-building process just like retail investors, high-net-worth individuals (HNIs), and institutional investors. SEBI regulations allow fund managers to allocate a portion of the fund’s assets to IPOs, provided the investment aligns with the scheme's objectives and risk profile. For instance: A large-cap fund may only invest in IPOs of companies expected to be included in large-cap indices A multi-cap or flexi-cap fund has more flexibility to take exposure across market capitalisations, including IPOs An ELSS fund (Equity-Linked Savings Scheme) can also participate in IPOs if it aligns with its tax-saving and equity investment objective So, the short answer is: Yes, mutual funds can and do invest in IPOs — but not all funds, and not always. Why and When Do Mutual Funds Invest in IPOs? - H2 Investing in IPOs offers mutual fund managers several strategic advantages, including: 1. Access to Early Growth Potential - H3 Many IPOs are of young, fast-growing companies. By investing early, mutual funds aim to capture the growth upside before the stock gains mainstream popularity. 2. Price Arbitrage Opportunities - H3 If a mutual fund believes that the IPO is underpriced relative to its intrinsic value, it may invest with the intent of benefiting from listing gains or long-term appreciation. 3. Portfolio Enhancement - H3 Some IPOs bring fresh sector exposure or innovation to the market. Fund managers may invest to diversify or rebalance the portfolio with new-age businesses, like fintech or EV startups. 4. Long-Term Bets - H3 Fund managers often look at IPOs with a long-term lens. The goal isn’t always listing gains but building a position in a company expected to perform well over years. 5. Demand and Liquidity Trends - H3 In bullish markets, IPOs tend to be oversubscribed and see strong listing premiums. Mutual funds may participate to ride the market momentum, especially when investor confidence is high. Factors Fund Managers Consider Before Investing in IPOs - H2 While IPOs are exciting, they are also risky and speculative, especially for companies with no prior listing record. Fund managers conduct rigorous due diligence before deciding to allocate your money to an IPO. Here are the key factors considered: 1. Company Fundamentals - H3 This includes examining the company’s: Revenue and earnings trends Debt levels and capital structure Profit margins and business scalability Competitive advantage and market share 2. Valuation Metrics - H3 Fund managers analyse: Price-to-Earnings (P/E) ratio Price-to-Book (P/B) ratio Enterprise Value to EBITDA (EV/EBITDA) These are compared with listed peers in the same sector. 3. Promoter and Management Track Record - H3 A critical evaluation is made on the credibility, governance standards, and historical performance of the promoters and top management. 4. Utilisation of IPO Proceeds - H3 Fund managers study how the company plans to use the funds—whether for debt repayment, expansion, or general corporate purposes. 5. Macroeconomic and Sector Trends - H3 Sectoral outlooks, regulatory policies, and broader market sentiments also influence IPO investment decisions. 6. Anchor Book Participation - H3 Strong interest from anchor investors (like global funds or sovereign wealth funds) signals confidence in the issue, making it more attractive for mutual fund participation. Best IPO Mutual Funds: What to Look For - H2 If you're keen on gaining exposure to IPOs through mutual funds, it's important to choose the right type of fund. While there’s no official category called “IPO mutual funds,” some schemes actively participate in upcoming IPOs. Here’s what you should look for when selecting such a fund: 1. Fund Category and Investment Mandate - H3 Start by checking the category of the fund. Flexi-cap, multi-cap, and mid-cap funds generally have more leeway to invest in IPOs. These funds are not restricted to a single market capitalisation and often aim to capture high-growth opportunities, making them ideal for IPO exposure. 2. Track Record of Participating in IPOs - H3 Review the fund’s portfolio history. Some mutual funds consistently allocate a portion of their assets to new listings. You can find this information in the fund’s monthly factsheet or portfolio disclosure. Look for funds that have a pattern of investing in IPOs over time—not just as a one-off move. 3. Fund Manager's Experience and Strategy - H3 A skilled fund manager makes a significant difference. The manager's ability to evaluate IPO valuations, industry potential, and company fundamentals is crucial. Look for funds managed by professionals with a proven track record in equity investing and a sound IPO selection approach. 4. Diversification and Risk Management - H3 An ideal fund won’t rely heavily on IPOs alone. Instead, it will use IPO investments as part of a broader equity strategy. Ensure that the fund holds a well-diversified portfolio alongside its IPO allocations to reduce volatility and balance risk. 5. Consistent Performance Over Market Cycles - H3 While past performance isn’t a guarantee of future returns, funds that have consistently performed well across different market cycles often reflect strong management and strategy. Look at long-term performance metrics like 3-year or 5-year returns instead of just recent gains. 6. Transparency and Reporting - H3 Good IPO-investing funds are transparent about their holdings. Choose funds that provide detailed disclosures about their portfolio, including new IPO allocations, so you can track how your money is being deployed. Also, read the scheme information document (SID) to understand the fund’s mandate and whether it allows active IPO participation. Should You Invest in a Mutual Fund That Invests in IPOs? - H2 Pros: Access to IPOs without applying individually Professional due diligence and analysis Built-in diversification Potential to capture high-growth opportunities Cons: IPO investments may not always succeed May increase portfolio volatility Returns can be affected by market timing and sentiment If you're a long-term investor, funds that occasionally invest in IPOs can be a good addition to your portfolio — but don’t chase IPO exposure alone. Always assess the fund holistically. Conclusion - H2 Yes, mutual fund schemes in India can and do invest in IPOs, but they do so strategically — not emotionally or impulsively. Fund managers assess multiple factors before deciding to put your money in newly-listed companies. As a retail investor, you benefit from their expertise and risk management process without having to analyse IPOs on your own. If you're looking for exposure to IPOs but want to avoid direct stock-picking, investing in a mutual fund that invest in IPO offers a smart, diversified route. However, always match the fund’s strategy with your risk tolerance, time horizon, and financial goals.

Mistakes People Make While Investing and How to Fix Them

10 July 2025 | 7 mins read

Investing can be one of the most effective ways to build wealth over time. Whether you’re investing in mutual funds or stocks, the goal is simple: earning returns that beat inflation and help you achieve financial freedom. However, investing isn’t just about selecting the right stocks or funds — it’s also about avoiding costly mistakes that can slow your progress down.

How Can ELSS Funds Be Redeemed? Rules for ELSS Withdrawal

26 June 2025 | 9 mins read

Equity-linked Savings Schemes (ELSS) are a type of mutual fund in India that provide tax relief under Section 80C of the Income Tax Act. ELSS have a three-year lock-in period, during which the amount invested cannot be withdrawn. It is important for investors to know the ELSS redemption process, rules, and tax implications while making their financial plans. This article explores the intricacies of ELSS mutual fund redemption, shedding light on the procedures and considerations.

View All

FAQ

Is a SIP 100% safe?

While there is no 100% safe investment, a SIP can manage your risk in investment (to some extent) depending on the type of SIP you choose. SIPs are a way to invest your money in mutual fund schemes that invest in different asset classes. You may choose debt-focused funds to minimise your risk (relative to equity-oriented mutual funds), but even with these, you may not be potentially without any risk. Relative to traditional instruments like a fixed deposit, a SIP may be more risky as it invests in market-related instruments.

Is a SIP better than an FD?

If you are an investor searching for an investment that gives you high gains, a SIP may be an option to consider. However, a SIP may also offer more risk than a conventional fixed deposit where returns are assured based on your investment amount. Still, SIPs are known to outperform traditional instruments like FDs for long-term growth of wealth.

Can a SIP go in loss?

It is possible that SIPs may result in losses as they invest your money in market-related assets like stocks. The risk of any given SIP is based on the asset class of the mutual fund and the performance of the market. Therefore, during market downturns, you may not get potentially positive returns, but in the long term, markets are prone to do well and give you substantial gains.